Merryn's Blog

Don't mention the Trade War

The smell of trade war is suddenly in the air, says the Wall Street Journal. Last Friday night, Barack Obama make a shock move by slapping a 35% tariff on imports of Chinese tyres. And Beijing is incensed. The Chinese are threatening to retaliate by taking their anger out on US chickens and auto parts. Well done Mr Obama, says today's editorial, "America now has its first protectionist President since Herbert Hoover".

The smell of trade war is suddenly in the air, says the Wall Street Journal. Last Friday night, Barack Obama make a shock move by slapping a 35% tariff on imports of Chinese tyres. And Beijing is incensed. The Chinese are threatening to retaliate by taking their anger out on US chickens and auto parts. Well done Mr Obama, says today's editorial, "America now has its first protectionist President since Herbert Hoover".

But hold on a minute. It's not like this is a preemptive strike against the Chinese. In fact, Beijing has been waging a trade war against America and just about everyone else for years now. And its a hell of a lot more scary than banning car tires and chickens. I'm talking about technology metals.

For the last twenty years the Chinese have been battling to control the world's supply of a group of metals called rare earths. These metals are critical raw materials for American industry. Without them America can give up its dream of world leadership in everything from solar panels to wind farms and electric vehicles. The Chinese now control around 97% of the world of these metals. And now they are considering putting serious restrictions on exports of this critical metals. That could be a killer blow for Obama's green ambitions.

So the Americans (and the Japanese, Canadians... well, everyone) are scouring the earth for new reserves of rare earth metals. And the Chinese have their eye on a few other metals - cobalt in the Congo and tantalum in British Columbia.

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